I am also an American who lived in Finland, Austria, and Denmark for, cumulatively, over 5 years. I now own and run a small but successful bootstrapped American SaaS.
What bothered me is that in all the above countries, they try to encourage entrepreneurship through rigged government programs. These programs offer grants and other benefits to 'the right kind of startups' - usually ones that are fashionable because the subject is currently hyped - ai, climate change, etc. Bureaucrats who know nothing about business pick whom to award grants through bullshit means. I imagine there's a lot of 'who you know' going on, too.
That wouldn't be so bad but, because these countries have such high taxes and other restrictions, the only benefit to starting a business there are these programs.
With these countries, it's not important that your startup is actually making money as long as you can brag about how you're changing the world at parties.
Finland's startup culture is especially bad in this department. It was disappointing as Finland is otherwise awesome.
I agree. I think that a problem in the EU is the wide abundance of government subsidies. The intentions are good but in fact it messes up the mechanism of natural selection in startups. Companies that haven't managed to raise money from private investors because they shouldn't really be funded (for various reasons e.g. their business model isn't viable, not a good team, or have exterior obligations and aren't fully committed,...) manage to keep their business running for 2-3 years because they're being held in life support through a government subdidy. In the end, they still have to shut down when the funding runs out, resulting in a net loss for everyone.
Don't get me wrong, subsidies are generally still important, for instance for initiatives that have a positive societal impact but that are hard to monetize. It's crucial that these organizations can still exist (not everything needs to be able to generate shareholder value to have a right to exist) and if subsidies allow them to do their thing, then that's great. But for the private sector, I think that there are other mechanisms that achieve the same goal but that maintain the much-needed Darwinism of startups, e.g. by offering tax breaks for angel investors.
"Companies that haven't managed to raise money from private investors"
This comment is a bit off topic for Finland. It does not have large capital markets looking for a good investment. It's a capital poor country.
Which is a good thing to know, if you come here looking for startup funding. The reason you don't find strong local seed funding is not because government blocks them. The reason is there is no capital for seeding, so to speak.
Well, you do need capital markets, even small ones. For cultural reasons Finland really does not have them. For example, there are no local banks. The whole country has only a few large banks which all require collateral. And here, you don't really go asking for an investment from friends and families.
The main cultural difference here that failure is seemed extremely shamefull. And taking loans from friends and family more or less dubious. And if you failed, and had asked loans from friends and families, would be crushingly shamefull. Hence this creates fear, hence it's not really done.
This is also my experience. In Denmark they have a startup scene of sorts, but they literally only fund startups that are by the "right" people or are trendy. I never saw anything get funded on merit, just if you are Danish and in particular, if you came from the elite socioeconomic strata. I never saw any interest in if the idea was sound, if the kid applying for the money actually knows anything about it, etc. It always seemed like if you were a rich white guy, they had cash to throw your way. And yes, its 100% a case of winners being picked, which is why almost none of these companies actually works. They think that just because the kid is Danish that the market wants his idea. They are usually wrong.
Your experiences match mine exactly. There's a reason why the country doesn't have any anti-corruption agencies. Finland is a great country to be lower middle class in, but if you have a bit of ambition or talent, you'll probably find the environment quite demotivational.
> These programs offer grants and other benefits to 'the right kind of startups' - usually ones that are fashionable because the subject is currently hyped - ai, climate change, etc.
> I imagine there's a lot of 'who you know' going on, too.
Isn't this pretty much everywhere? US/India/China? And it's probably not limited to just government programs but even Angels/VCs/press are prone to hype?
The current product I'm building[1] doesn't excite a lot of people in my immediate vicinity but people thousands of miles away from me are looking forward to the launch. It's a question of positioning and product-market fit at the right place, right time with the right idea.
If the mom-test book and building this saas has taught me anything, you should always be evaluating the intent/point of view of the person you are talking to.
In this case, if it's a bureaucrat or a politician, it is all about optics. They have to justify every decision made, so implicitly their aim is to gain brownie points with the population and an average population does not really evaluate ideas based on pure merit but on what feels good which is, almost always, hype.
No. In the United States, the majority of businesses get funding because the founders have a good business plan. It's sometimes easier if you know the right people, but only if you seek capital from those types of people.
Finland really does not have it. This may feel odd, but really, Finland is capital-poor country.
Unless government invested, nobody would.
In places like England with lots of private capital it makes sense to leave investment to the markets. But like I said... that market of capital just trying to find the best investment, does not exist in Finland in massive scale.
You do realize our way of life was built from investment? Scientific revolution gave us ideas but industrialization gave us the means the realize those ideas to the benefit of all mankind. To not to invest means no creative destruction, and stagnation.
You were responding to a specific complaint, and I was responding to your response.
European governments are throwing money at questionable startups in the hope of replicating SV. Being opposed to that is not the same as not believing in investment as a general principle (?!).
Ah, sorry. Your comment was just that "It's OK if nobody invests". I was responding to that in general principle.
European governments are throwing money at all sorts of dubious things. I don't think being inept about how to create new business value is the worst thing they do. At least there is funding available.
I suppose the thing that ires you is - is this funding inclusive or is it only supplied to cronies. Knowing european systems, I think, like everywhere, having connections of course helps, but in general the systems are built with some level of inclusivity in mind.
I believe the programs are actually harmful, because they filter for different things than what it actually takes to make a startup work. You're teaching people to play games and jump through arbitrary hoops, rather than connect with customers and identify problems to solve.
And that's before you take in to account corruption and inclusivity. I do believe Europe (at least based on my experience living in Germany) makes effort towards inclusivity, but if you looked at where this money is going, it would be vastly weighted to the middle and upper class (though I concede I may be wrong on this point).
Given that you can easily bootstrap a tech company on the side with some contract work, my belief can be summed up as the practice is: 1) actively harmful 2) unfair 3) wasteful 4) unnecessary
It sounds your argument is based on claims of hypothetical second order systems effects. I think that systems thinking is important - but makes it very hard to discuss further if the other party (me) is not deeply familiar with the domain (german economic life and people) which I'm not.
I.e. 'actively harmfull' -> but just dropping state investment won't magically teach peoples how to do business in a customer oriented way. So you need some second order effects to kick in (i.e. people would then focus on market needs more etc).
I can't really comment on that. I don't know the german psyche enough to postulate on the second order effects.
Most of german industry has been grown historically in a corporative manner, so I'm a bit skeptical you could drive US style individual entrepreunship in just by dropping this or that government program.
So only Americans can make these sort of companies? This is a deliberate investment by their government, and yes they shouldn't be handing out to Americans who can go to SV and get their handout from their VCs.
> These programs offer grants and other benefits to 'the right kind of startups' - usually ones that are fashionable because the subject is currently hyped - ai, climate change, etc.
As opposed to the American VC model currently driving such vital innovations as "how do we make middle class people use a jitney cab service?", "what if short term office leases came with free beer?", "will lazy people pay to have food delivered?" and "oh will they pay to have other stuff delivered, too?"
Look, I kind of get what you're saying, but it's not as if US startups are immune from bragging about "changing the world" and I'm more willing to put up with that bragging if you're at least trying to solve an actual hard problem.
The government should be funding crazy blue-sky long shots like small-scale fusion reactors and surgical nanobots because nobody else will. It's hard to make money on that kind of thing in the short- to medium-term but if it came to fruition, it really would be transformative.
> With these countries, it's not important that your startup is actually making money
Wow. I always thought that's a SF VC thing. If anything EU businesses focus much much earlier on profitability. That's the reason why they are much more risk averse and rarely (if ever) create some really ludicrous startups.
"these countries have such high taxes and other restrictions, the only benefit to starting a business there are these programs"
Well, that's not true. You also have a good safety net if it doesn't work out.
Quality of life, happiness, health care and education is also good or among the best.
What bothered me is that in all the above countries, they try to encourage entrepreneurship through rigged government programs. These programs offer grants and other benefits to 'the right kind of startups' - usually ones that are fashionable because the subject is currently hyped - ai, climate change, etc. Bureaucrats who know nothing about business pick whom to award grants through bullshit means. I imagine there's a lot of 'who you know' going on, too.
That wouldn't be so bad but, because these countries have such high taxes and other restrictions, the only benefit to starting a business there are these programs.
With these countries, it's not important that your startup is actually making money as long as you can brag about how you're changing the world at parties.
Finland's startup culture is especially bad in this department. It was disappointing as Finland is otherwise awesome.